Telco giant MTN abandons early Nigeria debt payment due to currency shortage

The mobile-phone company sees the naira deteriorating further.

MTN Group isn’t able to arrange the early repayment of about $500 million of debt held in Nigeria, the wireless carrier’s biggest market, due to a lack of hard currency available in the country.

“We had looked to do the early resettlement but currently we are not able to,” Nik Kershaw, head of investor relations, said by phone on Monday. 

“In Nigeria there is limited availability of the hard currency.” MTN, based in Johannesburg, said Aug. 5 it was in talks with Nigeria’s Central Bank about the early repayment of borrowings to reduce exposure to the naira, which has weakened against the U.S. dollar this year. 

The mobile-phone company sees the naira deteriorating further, Kershaw said. Declines in emerging market currencies against the dollar, including the South African rand, will negatively affect the business, Kershaw said. 

The cost of importing handsets into South Africa could rise, for example, costing the consumer more, he said. The rand tumbled to a record low on Monday on concern plunging global commodity prices will worsen the country’s economic outlook. The currency traded 1.7% weaker at 13.1952 against the dollar as of 11:56 a.m. in Johannesburg.

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